Sunday, September 21, 2008

This makes either the third or fourth picture of Treasury Secretary Hank Paulson here today - there must be something terribly wrong in the world to warrant such attention.

This week's Newsweek cover just about sums up the current situation - he runs the Treasury Department and his signature is on the U.S. currency which may as well say, "In Hank we trust", rather than "In God we trust".

The two are almost one and the same these days.For more, Yves Smith at Naked Capitalism is called upon to try to make sense of things:

First, let's focus on the aspect that should get the proposal dinged (or renegotiated) regardless of any possible merit, namely, that it gives the Treasury imperial power with respect to a simply huge amount of funds. $700 billion is comparable to the hard cost of the Iraq war, bigger than the annual Pentagon budget. And mind you, $700 billion is not the maximum that the Treasury may spend, it's the ceiling on the outstandings at any one time. It's a balance sheet number, not an expenditure limit.

But here is the truly offensive section of an overreaching piece of legislation:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

This puts the Treasury's actions beyond the rule of law. This is a financial coup d'etat, with the only limitation the $700 billion balance sheet figure. The measure already gives the Treasury the authority not simply to buy dud mortgage paper but other assets as it deems fit. There is no accountability beyond a report (contents undefined) to Congress three months into the program and semiannually thereafter. The Treasury could via incompetence or venality grossly overpay for assets and advisory services, and fail to exclude consultants with conflicts of interest, and there would be no recourse. Given the truly appalling track record of this Administration in its outsourcing, this is not an idle worry.

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comments:

dearieme
said...

Anyone of Mr Paulson's generation who got to the top in investment banking is someone to whom I should extend little trust. I wouldn't even allow "the benefit of the doubt". Poacher-turned-gamekeeper is all very well, but where's the evidence that he has turned?

I agree with everything Yves said until that last idiotic sentence. The Bush administration would have 3 months under this legislation, essentially meaningless. The NEXT administration is the one who will have the power because the next adminstration will appoint a new Secretary of Treasury.